OFAC Investigations Defense - Securities Litigation & Compliance Services
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OFAC Investigations Defense

Our Lawyers Defend Companies and Individuals During OFAC Investigations

John W. Sellers
Attorney John W. Sellers
SEC Defense Team Lead
Former DOJ Trial Attorney

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) is tasked with administering and enforcing various sanctions programs designed to prevent foreign nations, companies, and individuals of concern from doing business with U.S. entities. While these sanctions programs primarily target foreign entities, domestic entities must comply with these programs to avoid subjecting themselves to OFAC scrutiny as well.

OFAC’s Office of Compliance and Enforcement has become increasingly active in recent years. It regularly conducts investigations targeting companies and individuals in the U.S. and abroad. As violating OFAC sanctions can lead to substantial penalties, companies and individuals targeted in OFAC investigations need to engage experienced defense counsel.

Experienced Defense Attorneys for OFAC Investigations

Oberheiden’s OFAC defense practice is led by founding attorney Nick Oberheiden, PhD and former U.S. Department of Justice (DOJ) Senior Trial Attorney John Sellers. Nick and John bring a high level of experience to the table, and they lead the firm’s nationwide network of senior-level attorneys and consultants who include former high-ranking attorneys and special agents with the DOJ and various other federal agencies. Nick and John both have extensive experience dealing with OFAC on behalf of corporate and individual clients—experience which includes favorably resolving OFAC investigations without publicity or penalties.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd
Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester
Brian J. Kuester

Former U.S. Attorney

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney

Local Counsel

John W. Sellers
John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara
Linda Julin McNamara

Federal Appeals Attorney

Aaron L. Wiley
Aaron L. Wiley

Former DOJ attorney

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (DOJ)

Chris Quick
Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow
Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Understanding Why OFAC Investigates

OFAC investigations can have several triggers; and, when you or your company is facing scrutiny from OFAC, understanding why is imperative for building an informed defense strategy. When we defend clients that are facing scrutiny from OFAC, one of our first steps is to engage with the Office of Compliance and Enforcement’s personnel to gather as much insight into the investigation as possible. This includes working to gather insights that we can use to discern the underlying impetus of the inquiry—which is typically one of the following:

  • Report from a U.S. Financial Institution – Banks and other financial institutions in the United States have an obligation to notify OFAC when they reject or block transactions based on apparent sanction violations.
  • Referral from a U.S. Law Enforcement Agency – OFAC often works in close coordination with the DOJ, Federal Bureau of Investigation (FBI), and other government agencies, and routinely initiates investigations based on referrals received from these agencies.
  • Referral from a Foreign Law Enforcement Agency – OFAC acts on information received from foreign law enforcement agencies and other governmental entities as well, and it maintains a close working relationship with its counterparts in many foreign nations.
  • SelfReporting – While self-reporting unintended sanction violations to OFAC can help mitigate companies’ and individuals’ risks when handled appropriately, it can also trigger an investigation in some cases.
  • Whistleblower Complaint – Reports from whistleblowers can also trigger OFAC investigations. This includes current and former employees as well as competitors and other third parties.
  • Confidential Informant – In some cases, OFAC relies on information received from confidential informants working with law enforcement agencies in the U.S. and abroad.
  • Media Reports and Other Publicly Available Information – Media reports and other public sources of information can trigger OFAC investigations as well. In many cases, news outlets will report on major transactions before they come onto OFAC’s enforcement radar.

While understanding an OFAC investigation’s trigger is important for several reasons, one of the most important reasons is that companies and individuals will often need to defend themselves on multiple fronts. For example, if OFAC is acting on a tip received from a U.S. or foreign law enforcement agency, then in addition to defending against the alleged sanction violations, the target may need to defend against various other allegations as well.

Understanding What OFAC Investigates

After determining the trigger for a company’s or individual’s OFAC investigation, the next critical step is to understand what OFAC is investigating. While OFAC’s enforcement jurisdiction is fairly limited when compared to that of the DOJ, FBI, and other law enforcement agencies, discerning the focus and scope of an OFAC investigation can still prove challenging. Additionally for targeted companies and individuals that have engaged in multiple overseas transactions, determining which specific transaction or transactions are under scrutiny is imperative. Then, it will be possible to narrow in on specific potential violations, conduct a targeted risk assessment, and build an informed and effective defense strategy.

Broadly, OFAC investigations typically focus on suspected violations such as:

  • Engaging in financial transactions with specially designated nationals (SDNs)
  • Failing to comply with the terms of a general or specific license
  • Failing to obtain a specific license
  • Violations of OFAC regulations
  • Violations of OFAC sanction programs

Within each of these categories (among others), OFAC investigations can target a broad range of specific offenses. OFAC license and sanction violations can take many different forms, and different allegations will often require very different defense strategies.

Understanding the Risks of Facing an OFAC Investigation

When facing an OFAC investigation, it is also necessary to understand the risks involved. OFAC enforcement actions can lead to various consequences, with potential outcomes varying greatly depending on the specific allegations involved and the amount of evidence OFAC was able to uncover during its investigation.

Depending on the circumstances involved, the potential outcomes of an OFAC investigation may include:

  • No Action – Once OFAC has initiated an investigation, the best-case scenario is to resolve the investigation without further action. If OFAC is unable to gather sufficient evidence to substantiate civil or criminal charges, then this should be the end of the inquiry.
  • Cautionary Letter – If an investigation does not uncover evidence of a violation, OFAC may choose to issue a cautionary letter. Issuance of a cautionary letter indicates that while the investigated transaction does not violate the law, a similar transaction under different circumstances could trigger enforcement action.
  • Finding of a Violation – If OFAC uncovers evidence of a violation, it will issue a formal finding. At this stage, the targeted company or individual will have a limited opportunity to respond before OFAC imposes administrative or civil penalties.
  • Administrative Penalties – Upon finding a violation, OFAC has the authority to impose various administrative penalties. These include issuance of cease-and-desist orders; denial, suspension, and modification of specific licenses; and, revocation of any other previously issued authorizations.
  • Civil Monetary Penalty (CMP) – OFAC also has the authority to impose civil fines when warranted. Depending on the scope and nature of the findings at issue, CMP in OFAC enforcement cases can range from thousands to millions of dollars.
  • Referral to the DOJ – Finally, if an investigation uncovers evidence of possible criminal violations, OFAC can refer the matter to the DOJ for criminal prosecution. At this stage, the DOJ may continue to investigate, or it may use OFAC’s evidence to pursue a grand jury indictment.

In many cases, OFAC investigations will begin informally. But, if OFAC finds evidence suggesting a potential violation, it may then exercise its power to issue an administrative subpoena. While it is important to engage defense counsel promptly upon learning of an OFAC investigation at any stage; if you have been served with an administrative subpoena, it is even more important that you speak with an experienced OFAC defense lawyer right away.

FAQs: Defending Against OFAC Investigations

Do I Need Defense Counsel for an OFAC Investigation?

 

All companies and individuals that are facing OFAC investigations should engage defense counsel promptly. These investigations can lead to substantial penalties; and, even if an investigation does not result in fines or prison time, revocation of authorization to do business with a foreign entity or individual could lead to significant financial losses.

Should I Cooperate During an OFAC Investigation?

 

While cooperating with OFAC can often be an effective defense strategy, the extent to which a company or individual should cooperate varies case by case. When you engage defense counsel, your legal team will be able to advise you regarding how to approach the investigation.

How Can Companies Defend Against OFAC Investigations?

 

One of the most effective defense strategies for companies facing OFAC investigations is to demonstrate good-faith adherence to a comprehensive OFAC compliance program. OFAC expects companies to take their compliance obligations seriously, and showing that either (i) a violation resulted from employee misconduct rather than an institutional failure; or, (ii) the company’s compliance program prevented a potential violation will facilitate a quick and favorable resolution in many cases.

What Should I Do if OFAC is Investigating Me or My Company?

 

If OFAC is investigating you or your company, your first step should be to engage an OFAC defense law firm. Preventing an adverse outcome will require an informed defense strategy, and you will need to be careful to avoid mistakes that could jeopardize your (or your company’s) defense.

What Happens If I Ignore an OFAC Investigation?

 

Ignoring an OFAC investigation is not a good idea. If you ignore the investigation, OFAC will conduct its investigative and enforcement activities unchecked, and there is a good chance that this will lead to enforcement. While you will have the opportunity to respond if OFAC finds a violation, waiting to take action at this stage limits your options—and increases your risk—significantly.


Contact the Senior OFAC Defense Lawyers at Oberheiden P.C.

If you need experienced defense counsel for an OFAC investigation, we encourage you to contact us promptly. To speak with a senior OFAC defense lawyer at Oberheiden P.C. in confidence, call 866-755-0697 or request a complimentary consultation online now.

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